From Ballots to Boardrooms: How Elections Impact and Influence the Business Landscape

Businesses must anticipate and recognize how geopolitical risk can affect their financial and risk strategies. There are direct forms of geopolitical risk, which occur when political conditions in the countries in which firms are operating change in a way that impacts the business environment. This could be a change of government, the passage of new legislation or even the outbreak of a civil war. There are also indirect forms of risk, such as political events outside the country of operation that can impact business conditions, including supply chain disruptions.

Elections can represent a particular form of political risk, predictable in timing, allowing businesses to prepare for potential outcomes.

Three Notable Trends From This Year’s Elections So Far:

1. There is widespread anti-incumbency sentiment exhibited in elections from South Africa to Iran to the UK. This trend indicates a desire for change and dissatisfaction with the current leadership, which can lead to political instability. Businesses need to be prepared for potential policy changes and shifts in government priorities that could affect their operations.
2. Voters have been shifting away from traditional right-of-center and left-of-center parties in favor of new parties, populist parties and extremist parties. The rise of new, populist and extremist parties can lead to an unpredictable policy environment. These parties often have different economic and regulatory agendas, which can create uncertainty for businesses. Companies must stay agile and adaptable to navigate these changes, including investing effort in understanding the likely policy priorities of these new parties.
3. These elections have once again reminded us of the significant impact of electoral rules on election results, as seen in the contrasting French EU parliament and national parliamentary elections. The way electoral rules shape election outcomes highlights the importance of understanding local political systems. Businesses operating in multiple regions need to be aware of how these rules can affect political stability and policymaking, which in turn can influence their strategic planning and risk management. 

The upcoming U.S. presidential election represents a critical juncture with far-reaching implications for global balance and dynamics. As the world watches, this election’s outcome has the potential to profoundly shape international relations and policies. Understanding how elections and business are interlinked is crucial. For instance, changes in foreign policy could affect trade agreements, tariffs and international partnerships, impacting businesses that operate globally. Different election results across the U.S. presidential and congressional elections can result in potentially different approaches to economic policy and regulation. Different combinations of outcomes could lead to political uncertainty and instability, resulting in market volatility. Businesses must be ready to navigate fluctuating political, economic and financial conditions both in the U.S. and globally and adjust their strategies to mitigate risks and capitalize on opportunities.

Developing adaptable strategies to navigate complex and dynamic environments is essential. Equip your organization with tools for comprehensive risk assessment and future planning to stay ahead of global trends and developments.